Delaware's famed business court issues rare jailing order

Tom Hals

(Reuters) - Delaware's Court of Chancery, which has been known as a go-to venue for corporate disputes with a reputation for tailoring its rulings to fit each conflict, has added a new legal fix this week to its repertoire - incarceration.

W.L. Gore & Associates, famed for its waterproof Gore-Tex fabric, convinced a judge on the civil court that one of its former scientists should be jailed for failing to comply with orders that barred him from using company trade secrets.

The court has an international reputation for its long history of refereeing business disputes. In the past, the non-jury court has blocked billionaire investor Carl Icahn from disrupting the Dell Inc buyout and has called out bad behavior by Wall Street dealmakers such as Goldman Sachs Group Inc.

Ken Lagowski, the court's Register in Chancery who oversees administration, told Reuters the incarceration order was the first he had seen in 30 years.

A bench warrant was issued on Monday that directs a Delaware sheriff to bring the former Gore scientist Huey Shen Wu before judge Donald Parsons.

Late last month, Parsons ordered that Wu be jailed until he could convince the judge that he would comply with prior court orders regarding the trade secrets of Gore, based in Newark, Delaware.

Parsons also ordered Wu to give a full accounting of his financial affairs during the years when he allegedly flouted prior court orders, dating back to 2006.

Wu has not been charged with a crime, and his incarceration would end when he complies with Parsons' orders.

However, as he has done with many of Parsons' orders over the years, Wu ignored the order to surrender, Lagowski said.

Wu has been conducting business in Taiwan and China and is likely outside the United States, according to Gore's lawyer, Chuck Knapp of the Minneapolis office of Faegre Baker Daniels.

Civil court judges can use the threat of jail to force witnesses to testify or to ensure compliance with court orders.

In one prominent case in 2005, U.S. Judge Thomas Hogan in Washington ordered that New York Times reporter Judith Miller be jailed for refusing to reveal the source for her story about a CIA leak. She served three months and was released after reaching a deal with a special prosecutor investigating the leak.